I am not a fan of Dave Ramsey, but I think some of his stuff can be useful for some people. If you have $20k in credit card debt, then you need to be highly focused on getting out of debt. On the other hand, some of his stuff is way too extreme for my tastes and some of his stuff is downright dishonest. On the other hand, most people seem to be horrible money managers, I have even been amazed at how badly some people who should know better manage money. Part of it is how children are raised, if children are used to getting everything they want without sacrifice, they tend to grow up as adults who never sacrifice and thus end up at 65 without savings. On the other hand, you can have scrooges and spendthrifts come out of the same family. It is quite a mystery.
I don’t think it’s that mysterious. As DR says, there are natural savers and natural spenders. Some get pleasure from not spending–some get pleasure from spending. My first kid is a natural spender who used to spend every dollar practically as soon as it hit her hand. Meanwhile, her baby brother is a natural saver who (by the time he was 8) had over $100 saved, accrued mostly $1 at a time. Had things been allowed to take their natural course, Big Girl wouldn’t have a dime, whereas Middle Kid would have substantial savings.
However, we didn’t allow things to take their natural course. Among other things, Big Girl has her senior trip to Europe in 2.5 years. Starting in 8th grade, we explained to Big Girl that we are not paying for this (there’s this thing called “college” that
we are saving for) and if she wants to go on the big trip with all of her friends, she needs to be saving every month. Every month at the end of the month, she needs to hand over her contribution to her senior trip fund. Big Girl has been saving for nearly two years now, and there’s been an amazing metamorphosis in terms of her ability to forego pleasure now in favor of her long-term plans. The Bank of Mom and Dad also pays 3% on deposits once a year (and there tends to be a rush to fatten up accounts before the payout). There are no withdrawals from the Bank of Mom and Dad except for approved expenses (senior trip, first car, etc).
Interestingly, while both older children have substantial accounts with the Bank of Mom and Dad, Big Girl (who is more motivated at this point), now has about twice as big a balance as Middle Kid, who previously always used to have more savings. I have a similar personality type to Big Girl, and it’s gratifying to see how much better decisions she makes than I did at the same age (or much older).
Interestingly, I grew up to be very bad with money, despite it being far from the case that I was “used to getting everything * want without sacrifice.” In my particular case, it was more that when I was a kid, money was very scarce, appeared seemingly at random, I didn’t have any earning opportunities until I was 16, and there were few opportunities to spend it (country/small town setting), so the temptation was to spend it the instant there was an opportunity. Also, I literally never had the experience of saving up for a large purchase as a child, or in fact, saving up at all–that was simply a foreign concept when I was a kid. I would say that it’s virtually impossible to learn how to manage money without having money.*
on the vasectomy. Whoa! But the problem is, do people who are competent to teach this sort of thing want to teach it? It’s like political office–it seems to repel actually nice, competent people and attract creeps and power junkies.